GST Council to Discuss Tax Relief for Life & Health Insurance at December 21 Meeting

New Delhi : The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, is set to convene its next meeting in Jaisalmer, Rajasthan, on December 21. A key agenda is expected to be the exemption or reduction of GST on health and life insurance premiums. The Council may also deliberate on rationalizing tax rates for essential goods such as bottled drinking water and student notebooks, aiming to shift them to the 5% tax slab from the current 12%.

The Group of Ministers (GoM) was earlier tasked with submitting a report on GST rates for insurance by the end of October. Following a meeting on health and life insurance, a broad consensus emerged to exempt GST on premiums for specific policies. This includes life insurance policies and health insurance for senior citizens. Additionally, it is proposed that health insurance premiums up to ₹5 lakh for individuals, excluding senior citizens, be GST-exempt, while premiums for coverage exceeding ₹5 lakh would still attract an 18% GST rate.

The GoM on rate rationalization has also suggested revising GST rates on other goods frequently used by the general public. For instance, the GST on packaged drinking water containers of 20 liters or more could be reduced to 5% from the current 18%. If approved, bicycles costing below ₹10,000 and exercise notebooks could also see their GST rates lowered to 5%, aligning them with essential categories.

On the other hand, luxury goods may face steeper taxes. The GoM has proposed increasing GST on shoes priced above ₹15,000 and wristwatches costing over ₹25,000 from 18% to 28%. This aligns with the GST regime’s four-slab structure, where essential items are either exempt or taxed at 5%, and luxury goods incur a 28% levy. Mid-range items fall under the 12% or 18% tax brackets, which the Council is considering restructuring for better alignment.

The December 21 meeting is anticipated to finalize these proposals, with the potential for significant relief on everyday goods and essential services while increasing levies on high-end products.